2008 (12) TMI 616 - AT - Central Excise

Stay/Dispensation of pre-deposit - Cenvat/Modvat - burden to prove on department - inputs - duty paying invoices

Issues Involved:
1. Duty demand on inputs removed to the appellant's registered dealer's premises.
2. Compliance with Tribunal's remand order.
3. Provision of necessary documents to the appellant.
4. Financial hardship and balance of convenience for pre-deposit.
5. Lapses on the part of the officers involved in handling the case.

Issue-wise Detailed Analysis:

1. Duty Demand on Inputs Removed to the Appellant's Registered Dealer's Premises:
The major issue in the appeal is the duty demanded from the appellant on some inputs removed to their registered dealer's premises following the conversion of the manufacturing unit to a 100% EOU. Out of 18 inputs, the appellants had paid duty on a few inputs and only for a portion. The Revenue found that invoices produced by the appellant were fake and no goods were received under those invoices, confirming the demand on the ground that these inputs were part of those on which Modvat credit had been taken, necessitating duty payment.

2. Compliance with Tribunal's Remand Order:
The Tribunal had remanded the matter to the Commissioner for fresh adjudication after verifying the factual position. The appellant contended that the Commissioner did not obey the Tribunal's directions and reproduced the earlier order's findings verbatim. The appellant argued that the department neither provided copies of RG23A Part I and II registers nor reconciled the details as directed by the Tribunal. The appellant maintained that if the Tribunal's directed exercise were carried out, it would prove no credit was taken on the inputs removed without reversal of credit/paying duty.

3. Provision of Necessary Documents to the Appellant:
The appellant argued that the department had taken over the RG23A records and should have made them available to show that the seized goods were mentioned in the records, proving no credit had been taken. The Commissioner's office informed the appellant that the original file was not traceable. The Tribunal noted that the appellant requested documents after learning the original file was missing, which was a valid argument for their inability to defend the case properly.

4. Financial Hardship and Balance of Convenience for Pre-deposit:
The appellant did not provide any submissions regarding financial difficulty. The Tribunal noted that the case was 10 years old, and the amount payable would be more than 200% of what was due, considering simple interest. Therefore, the Tribunal found that pre-deposit would not cause undue hardship, and the balance of convenience favored the Revenue. The Tribunal directed the appellant to deposit Rs. 18 lakhs within eight weeks and report compliance, staying the balance duty, interest, and penalties during the appeal's pendency.

5. Lapses on the Part of the Officers Involved in Handling the Case:
The Tribunal identified serious lapses by the officers, including not providing the appellant with copies of all relied upon documents, ignoring the request for documents, and not discussing the relevancy of documents/records in the Order-in-Original. The Tribunal raised several questions regarding the handling of seized records, the private register corresponding to Form IV, and the investigation of a fire accident at the dealer's premises. The Tribunal directed the Registry to send a copy of the order to the Chief Commissioner Vadodara for necessary action and expected the Revenue to explain the correct position regarding these questions during the regular hearing.

Conclusion:
The Tribunal ordered a pre-deposit of Rs. 18 lakhs and stayed the remaining duty, interest, and penalties during the appeal's pendency. The Tribunal highlighted lapses by the officers and sought explanations for several procedural issues when the case comes up for regular hearing.

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